A small software company invests $30,000 to produce a software package that will sell for $64.95. Each unit can be produced for $42.25. (Round your answers to the nearest whole number.)
What is your question?
A small software company invests $30,000 to produce a software package that will sell for $64.95. Each unit can be produced for $42.25. (Round your answers to the nearest whole number.)
(a) How many units must be sold to break even
(b) How many units must be sold to make a profit of $100,000?
64.95 - 42.25 = 22.70
30,000 / 22.7 = 1,322 units to break even
(100,000 - 30,000) / 22.7 = ?
To determine the profit made by the company from selling the software package, we need to calculate the total revenue and the total cost.
Total Revenue:
The selling price of each unit is $64.95. So, the total revenue from selling the software package can be found by multiplying the selling price by the number of units sold.
Total Cost:
The cost to produce each unit is $42.25. Since the company invested $30,000, the total cost can be calculated by dividing the investment amount by the cost per unit.
Calculations:
Number of units sold = Total Investment / Cost per unit
Number of units sold = $30,000 / $42.25
Total Revenue = Selling Price per unit * Number of units sold
Total Revenue = $64.95 * (Number of units sold)
Total Cost = Total Investment / Cost per unit
Profit = Total Revenue - Total Cost
Now, let's calculate the profit made by the company:
Total Revenue = $64.95 * ($30,000 / $42.25)
Total Cost = $30,000 / $42.25
Profit = Total Revenue - Total Cost
When you substitute the values and calculate the above expressions, you will get the profit made by the company.